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versionc1 - Introduction to Microeconomics Spring 2010 Exam...

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Introduction to Microeconomics Spring 2010 Exam 1 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The value of the price elasticity of demand for a good will be relatively large when a. the time period in question is relatively short. b. there are no good substitutes available for the good. c. the good is a luxury as opposed to a necessity. d. All of the above are correct. ____ 2. Which of the following is not a determinant of the demand for a particular good? a. the prices of related goods b. the prices of the inputs used to produce the good c. income d. tastes ____ 3. Alice says that she would buy one banana split a day regardless of the price. If she is telling the truth, a. Alice's price elasticity of demand for banana splits is 1. b. Alice's demand for banana splits is perfectly inelastic. c. Alice's income elasticity of demand for banana splits is 0. d. None of the above answers is correct. Scenario 5-4 Suppose the government is concerned about firms in the United States importing illegal caviar. As a result, the government increases border patrols to catch illegal shipments. U.S. Customs agents perform DNA testing on the caviar to determine if it comes from endangered species of fish. If so, the government destroys the caviar. ____ 4. Refer to Scenario 5-4. What would we expect to observe in the caviar market? a. Total revenues to caviar firms will increase if the demand for caviar is inelastic. b. Equilibrium prices will increase by more if the demand for caviar is elastic than if demand is inelastic. c. Equilibrium prices and quantities will increase. d. All of the above are correct. ____ 5. Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then a. Greece will produce more fish than it would produce in the absence of trade. b. Germany will produce more cars than it would produce in the absence of trade. c. the two countries’ combined output of both goods will be higher than it would be in the absence of trade. d. All of the above are correct. Figure 4-3
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D' D quantity price ____ 6. Refer to Figure 4-3 . The movement from D to D could be caused by a. a decrease in the price of a substitute. b. a decrease in the price of a complement. c. an increase in price. d. a technological advance. ____ 7. Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because a. the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline. b.
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versionc1 - Introduction to Microeconomics Spring 2010 Exam...

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